Why Are 46 Million Americans Living in Poverty?

September 13, 2011 at 12:00 AM EDT

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The latest Census measurement of U.S. poverty out Tuesday found that 46 million Americans live in poverty. Ray Suarez examines what's behind the highest level of poverty in America since 1993 with Douglas Besharov of the University of Maryland and Isabel Sawhill of the Brookings Institution.

TRANSCRIPT

JUDY WOODRUFF: The latest measurement of poverty in America was released today by the U.S. Census Bureau, and the news was headed in the wrong direction.

Ray Suarez looks behind the numbers.

RAY SUAREZ: At a time when much of Washington is focused on helping the struggling middle class, today’s report outlined the magnitude of the problem for 15 percent of Americans who live in poverty. More than 46 million lived below the federal poverty line last year, the highest number since the census began tracking that data five decades ago.

The poverty line is lower than you might think: $11,139 a year for a single person, $22,314 a year for a family of four. The poverty rate itself is at the highest level since 1993.

Isabel Sawhill, another 2.5 million people fell into poverty in 2009. At the risk of asking the obvious, is it unemployment that’s driving that number?

ISABEL SAWHILL, Brookings Institution: Oh, it is definitely unemployment that’s driving this increase in poverty rates and leading to the record numbers that you talked about in the lead-in.

You know, the very best anti-poverty policy is to have a job. And with so many people out of work or having part-time jobs when they’d like full-time work, it’s inevitable that the poverty rate is going to go up.

We have done some projections of what the poverty rate will be mid-decade, a few years from now, if the unemployment projections that most economic forecasters are using hold true. And it’s a very dismal picture.

RAY SUAREZ: This is a number, Douglas Besharov, that has been rising since the economy began to suffer several years ago. Is there a new poor? Is there a profile for who is joining the ranks of those living under $22,000 for a family of four?

For as long as we have been collecting statistics about poverty, we have seen a slow, but steady reduction in poverty rates in the country, with members of racial and ethnic groups being left behind, at least somewhat, and problems of family breakdown, divorce, non-marital births contributing to poverty rates.

This — as Belle was mentioning, this downturn is sending many millions of people who enjoyed a middle-class or at least a very comfortable lifestyle into poverty. And it could be a very long-term condition, as Belle was saying. We could be at a bend point in our economy. And unless we take some pretty drastic action to turn this around, it will be with us for quite a number of years.

RAY SUAREZ: Action like what, Professor?

DOUGLAS BESHAROV: Well, if we look at what’s been happening in Europe, the European countries have turned to a much more aggressive system of job retraining.

And, actually, although we have blithely commented that the Europeans are not very good at expecting people to work, they have been imposing job retraining, job search and job-taking responsibilities on the unemployed. It seems strange and really harsh to talk about within the conditions we have now, but, over time, unless the economy really improves, many of the people who are unemployed now will, sad to say, have to take jobs that don’t pay nearly as well as they used — as the jobs they used to have.

RAY SUAREZ: Do you agree with that diagnosis?

ISABEL SAWHILL: I agree with that as far as it goes, but I would also emphasize that we really do need to get the job market working again.

We have a huge pool of unemployed. People with the least skills are going to be the least competitive to get the few jobs that there are. We also need to extend a safety net to the people who aren’t going to be able to find jobs in this dismal labor market.

I think extending unemployment insurance, for example, is about the most important thing we could do to make sure that the safety net works or continues to work. It’s actually played a very important role throughout this recession.

If you look at the poverty rates once you adjust for the fact that people are getting certain benefits like food stamps and a few others, the poverty rate doesn’t go up as much as the raw figures show.

RAY SUAREZ: Well, when you further into the statistics, there are some frightening numbers in there, the highest number ever counted in extreme poverty, that is, a level half of what the established poverty rate is.

What does that tell you?

ISABEL SAWHILL: Well, it tells me that a lot of people aren’t working.

The way you get incomes down that low, because that would be like $5,000 for a single person, is because you’re not working or not working full-time. So I think this really is a job market problem, at least all the recent increases.

RAY SUAREZ: And, Professor Besharov, is there a mobility problem now as well? Once you have fallen, it’s harder than before to get back up?

DOUGLAS BESHAROV: Well, part of this is also age-related.

Certainly, the unemployed and they’re aged 50 to 60 face a job market that’s not very promising. So I think the demographics of some of the unemployed suggests that we will have to find some other kind of solution for them.

Black poverty rates, Latino poverty rates have also climbed. For the Latinos, immigrants and not, the construction industry has all but collapsed for them. As Belle was saying, unless the economy improves, these people will not have the kinds of job opportunities they had in the past.

I want to pick up on one point that Belle said, because I think it’s tremendously important that people understand this. We have had a very large increase in measured poverty, but that increase would be substantially greater if it weren’t for the extensions of unemployment and actually disability payments as well.

The extension of unemployment benefits to 99 weeks is masking even higher — what would have been higher levels of poverty.

RAY SUAREZ: So the safety net is doing its job?

ISABEL SAWHILL: The safety net has been doing its job. That doesn’t mean it couldn’t do better.

But we had a lot of safety net programs that were beefed up, increased during the Recovery Act that went into effect in 2009. And now the Recovery Act funds are disappearing. And, so, unless we do some extensions of things like unemployment insurance, food stamp program is important, child care, wage subsidies for the working poor, payroll tax cuts that will help low-income workers even more than middle-class workers, those things are very important right now.

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